RBC Capital has now released updated guidance for its Top 30 Global Ideas for 2018. From this list of 30 stock picks, I used TipRanks to select the 10 best stocks to buy right now. These are the stocks with a Strong Buy consensus from the Street and big upside potential. Note that this is based only on ratings from the last three months. For each stock I also include a TipRanks screenshot so you can check out for yourself the stock’s trajectory.
With the market so volatile right now, I believe this “Strong Buy” consensus rating provides reassurance that these stocks have big support across the board. At the same time, I take a deeper look into why RBC analysts have cherry-picked these particular stocks as their top investment ideas.
As you will also see, many of the quoted analysts are ranked very highly on their success rate and average return.
Year-to-date, RBC Capital says its top 30 list has significantly outperformed the MSCI Developed World Index, which makes this a very interesting list indeed. Let’s take a closer look now at these 10 top stocks to buy immediately:
Stocks to Buy: DowDuPont (DWDP)
Welcome to our first stock: DowDuPoint Inc (NYSE:DWDP) the world’s largest chemical company.
This new company is the result of a massive tie up between two chemical giants — Dow Chemical and Du Pont — back in August 2017. But DWDP won’t be around for long. As part of the deal, DWDP is due to be split into three publicly traded companies focused on agriculture, materials science and specialty products in 2019.
In the meantime, we have a sweet buying opportunity on our hands according to RBC’s Arun Viswanathan. He believes DWDP is poised to soar 47% in the coming months and explains: “We see a re-rating opportunity from ~9x to 10x+ as DWDP delivers on synergies (potential upside in procurement/revenue) and splits into three (and ultimately more) entities. We are modeling $3.3B synergies, but see upside to $3.5B-$4B.” He notes that the market has a track record of successful pure play spin offs like Axalta Coating Systems Ltd (NYSE:AXTA) and Chemours Co (NYSE:CC).
Stocks to Buy: ServiceNow (NOW)
TipRanks reveals that RBC Capital’s Ross MacMillan is the third-best-performing analyst out of over 4,700. He has a phenomenal track record over the last year with an 86% success rate and 27.1% average return. Right now, his top stock pick is Californian cloud computing company ServiceNow Inc (NYSE:NOW). Prices can reach $180 from $167 currently says MacMillan (8% upside).
“We are bullish on the company’s ability to take share in the IT Service Management (ITSM) market as ServiceNow becomes the “ERP” [enterprise resource planning] for IT.” And looking further afield, MacMillan has high hopes for ServiceNow expanding into enterprise. He sees customers and partners writing custom SaaS for HR, finance, facilities, legal, procurement, etc. on its platform.
Overall, NOW has received an impressive 16 recent buy ratings from the Street. As you can see from the screenshot, only two analysts are staying sidelined.
Stocks to Buy: Air Lease Corp (AL)
I highly recommend checking out Air Lease Corporation (NYSE:AL) right now as the stock is trading at bargain prices.
And I am not alone. With an “outstanding”’ management team, five-star RBC Capital analyst Jason Arnold envisages prices spiking to $87. That indicates massive upside potential from the current share price of nearly 100%. Note that this comes in way above the Street consensus of $62 (42% upside potential) — which still sounds pretty compelling.
Arnold explains why he is even more bullish than consensus here: “Our Top Pick rating on Air Lease Corp is driven by the following key fundamental factors, along with what we view as the currently very attractive valuation: 1) leading aircraft lessor; 2) growing portfolio and EPS outlook; and 3) highest return on equity (ROE) and lowest leverage in sector.”
Indeed, Arnold is projecting robust 20%-plus EPS growth ahead on strong revenue expansion.
Stocks to Buy: Dollar Tree (DLTR)
Popular discount store Dollar Tree, Inc. (NASDAQ:DLTR) is spreading like wildfire. The company is defying challenging retail conditions with one of the best store growth profiles in retail. Indeed, we are looking at about 4% annual new store growth potential over the next few years.
Five-star RBC analyst Scot Ciccarelli sums up his DLTR investment thesis here:
“We believe Dollar Tree’s stores remain highly attractive to consumers. We think that the company’s expanded food and consumables offering has greatly increased Dollar Tree’s addressable customer market, and that its stores continue to draw a broad cross-section of consumers.”
Ciccarelli is modeling for a 7% rise in share prices to $106.
Note that DLTR has a cautiously optimistic Moderate Buy analyst consensus rating based on all ratings from the last three months. Some analysts are concerned about challenging conditions for Family Dollar. However, if we look at only ratings from the best-performing analysts, the consensus shifts to Strong Buy:
Stocks to Buy: Broadcom (AVGO)
“AVGO has beat Street quarterly EPS estimates every quarter since its IPO. Management is disciplined in M&A, focusing on slower-growing companies that compete in oligopolistic industries with cost-cutting potential,” he wrote. Meanwhile the $5.5 billion Brocade acquisition should generate meaningful margins.
Given that the stock is currently trading at just $241, this Top 20 analyst sees AVGO rising 37% to hit $325. Most encouragingly, his bullish take is firmly echoed by the Street. We can see here how AVGO has only received one hold rating in the last three months vs 21 buy ratings.
Stocks to Buy: Parsley Energy (PE)
Basic materials stock Parsley Energy, Inc. (NYSE:PE) is the top stock in this sector right now. The company has made the savvy move of focusing exclusively on the Permian Basin, one of the most resource-rich oil basins in the world. As a result, PE is primed to outperform its rivals over the next 12 months.
For RBC Capital analyst Scott Hanold,“PE’s production growth profile, balance sheet, and oil hedge book are best-in- class and differentiate from peers” writes Hanold on April 2. He sees PE reaching $36 (27% upside potential).
In fact, as the chart above shows, this is actually marginally under the Street’s $38 average price target. This suggests impressive upside potential of 38%.
Stocks to Buy: Gartner (IT)
IT consulting firm Gartner Inc (NYSE:IT) snapped up CEB for $2.6 billion back in March 17. Following the deal, RBC Capital’s Gary Bisbee is optimistic about the outlook for this new consulting powerhouse. He is confident that IT’s management team has what it takes to transform CEB’s sales and retention for the long-term.
“We continue to view Gartner’s acquisition of CEB favorably, which we see as a good fit, and we remain bullish on the many ways that IT can improve CEB’s growth. We see potential for not only several years of elevated ~20% profit growth but also moderate valuation expansion over 18 – 24 months as Gartner proves its ability to improve CEB’s growth.”
This five-star analyst is betting on IT as his Top Stock Pick for 2018 with upside potential of over 23%. We can see that this “Strong Buy” stock has scored five recent buy ratings and just one hold rating. This is with a $138 average analyst price target. Plus, be aware that you can click on IT’s ticker above to get more insights on the stock.
Stocks to Buy: Aptiv (APTV)
Jump on board UK-based tech auto stock Aptiv PLC (NYSE:APTV) right now. The company is making the move from auto supplier to more of a “mobility enabler.” Indeed, the company’s goal is to “develop safer, greener and more connected solutions, which enable the future of mobility.” Luckily for investors, top RBC Capital analyst Joseph Spak approves. His Top Pick rating comes with a generous $110 price target (33% upside potential).
According to Spak, Aptiv’s outperformance versus global industry production will continue over the coming years. He believes this strong top-line growth will be driven by a product portfolio which is “well aligned with three important secular themes in auto: safe, green, and connected.” This should allow for further margin expansion and more aggressive M&A or shareholder cash returns.
We can see that Aptiv has the Street’s seal of approval with 11 buy ratings vs one hold rating.
Stocks to Buy: Facebook (FB)
RBC Capital’s Mark Mahaney is one of the best-ranked analysts on TipRanks. And despite Facebook, Inc.’s (NASDAQ:FB) ongoing data scandal, the social media giant remains his Top Stock Pick for 2018. He sees multiple catalysts driving growth from video ads to high engagement levels and its very large, growing user base.
“Facebook has more than 2B active users and is still growing this in the teens % Y/Y. The large amount of data collected on these users is a unique and valuable asset for ad and content targeting” concludes Mahaney.
Bearing all this in mind, the stock is looking very undervalued right now. Prices are now at $159 vs $187 three months ago. At this point Mahaney’s $250 price target indicates huge upside potential of 60%. Note that FB has easily retained the Street’s backing.
Overall, FB shows 30 recent bullish calls and only three holds or sells with a $222 consensus (43% upside potential).
Stocks to Buy: Raytheon (RTN)
On the back of multiple international defense contract wins, this “Strong Buy” stock has big Street support right now. In the last three months, top analysts have published seven recent buy ratings vs just one hold rating on Raytheon Company (NYSE:RTN). In particular, RBC’s Matthew McConnell believes that RTN boasts leading exposure to critical defense markets. He highlights RTN’s solid 2018 outlook including impressive 4% to 6% revenue growth.
“We view Raytheon as among the most favorably positioned defense companies based on its leading market positions in missile defense systems and missiles, which are seeing intense investment that we expect to continue for the foreseeable future.” Meanwhile, McConnell’s $244 price target suggests 11% upside potential for the coming months.
Which stocks are the top 25 analysts recommending right now? Find out here.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,500 analysts, 5,000 financial bloggers and even 37,000 corporate insiders. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.